1. Formation & Assent
  2. RSC § 18 Manifestation of Mutual Assent
  3. Manifestation of mutual assent requires that each party either make a promise or begin/render performance (Meeting of the Minds)
  4. RSC § 19 Conduct as Manifestation of Assent
  5. Manifestation of mutual assent may be wholly or partly by written or spoken words, other acts, or by failure to act
  6. Conduct is not effective as MOA unless he intends to engage the conduct and knows /should know the other party may infer assent from his conduct
  7. Conduct may be a MOA even though the actor does not in fact assent -- subject to contract defenses
  8. RSC § 22 Mode of Assent
  9. MOMA generally occurs through offer/acceptance
  10. MOMA may occur although neither offer nor acceptance can be identified and the moment of formation cannot be determined
  11. Cases
  12. Embry v. Hargadine[§19] (One year employment contract for salesman; disputed assent) -- Formation requires only a reasonable man intend and understand a contract to be formed regardless of subjective intent
  13. Luck v. Zehmer [§18] (Real Property sale on napkin while at bar) -- Subjective intent does not override objective manifestations of such intent
  14. What Constitutes an Offer?
  15. RSC § 24 Offer Defined
  16. An offer is the manifestation of willingness to enter into a bargain -- made in such a way to justify another’s understanding that his assent will conclude the bargain
  17. RSC § 26 Preliminary Negotiations (Advertisements/ Solicitation of Bids)
  18. A manifestation of willingness to enter into a bargain is not an offer if the receiving party knows/should know the person making it does not intend to conclude a bargain until he has made a further manifestation of assent
  19. RSC § 29 To Whom an Offer is Addressed
  20. The manifested intention determines who has a power of acceptance -- (2) such power may be created in a specified person, specified class of persons, or anyone who makes a specified promise/renders specified performance
  • RSC § 33 Certainty
  • Even if a manifestation of mutual assent is intended as an offer, it canoe form a contract unless the terms are reasonably certain with regard to all material terms
  • RSC § 27 Existence of Contract Where Written Memorial is Contemplated
  • Manifestations of an intention to adopt a written memorial of an agreement does not preclude formation; however, the circumstances may show the agreements are preliminary agreements
  • RSC § 25 Option Contracts
  • An option contract is a promise which meets the requirements for formation an limits the promisor’s power to revoke an offer -- option must be supported by consideration
  • Cases
  • Empro v. Ball Co. [§27] (Letter of intent included phrase “subject to incorporation in formal…) -- Preliminary agreements are enforceable only if there is an objective intent to be bound by the terms already settled
  • Leonard v. PepsiCo [§26] (Kid tried to buy jet with Pepsi points) -- Absent some clear and plain language to the contrary, advertisements are not enforceable merely because someone accepts the terms
  • Harris v. Time[§33/26] (Time mailer offering free watch for opening / trick) -- Advertisements can form unilateral contracts if it (1) calls for specific performance without further communication (2) contains some mechanism for notice of performance) (“Law disregards trifles” doctrine)
  1. Revocation
  2. RSC § 35 The Offeree’s Power of Acceptance
  3. An offer gives the offeree a continuing power of acceptance until that power of acceptance is terminated under § 36
  4. RSC § 36 Methods of Termination of the Power of Acceptance
  5. Power of acceptance is terminated by 1) Rejection or Counter offer 2) lapse of time 3) revocation by the offeror 4) death/incapacity of one party or by the non-occurrence of any condition of acceptance
  6. RSC § 37 Termination of Power of Acceptance Under Option Contract
  7. Power of Acceptance under an option contract is not terminated by rejection/ counter-offer, by revocation, or by death/incapacity unless the requirements are met for the discharge of a contractual duty
  8. RSC § 42 Revocation by Communication from Offeror Received by Offeree
  9. An offeree’s power of acceptance is terminated when the offeree receives a manifestation of an intention not to be bound
  10. RSC § 43 Indirect Communication of Revocation
  11. Power of acceptance is terminated when the offeree receives knowledge of definite action inconsistent with an intention to be bound made by the offeror
  12. Cases
  13. Dickinson v. Dodds [§43] (Unilateral option contract not supported by consideration;  sold property to another) -- Unilateral contract may be revoked until accepted -- revocation may be communicated through a third party)
  14. Smith v. Wheeler [§37] (False recital of nominal consideration on one-year option for land) -- False recital of nominal consideration creates an implied promise to pay when can be enforced by the other party -- no revocation
  15. Acceptance
  16. RSC § 19 Conduct as Manifestation of Assent
  17. Manifestation of mutual assent may be wholly or partly by written or spoken words, other acts, or by failure to act
  18. Conduct is not effective as MOA unless he intends to engage the conduct and knows /should know the other party may infer assent from his conduct
  19. Conduct may be a MOA even though the actor does not in fact assent -- subject to contract defenses
  20. RSC § 30 Form of Acceptance Invited
  21. Unless otherwise indicated by the language or the circumstances, a offer invited acceptance in any reasonable manner and medium
  22. In cases of doubt, offer is interpreted as inviting acceptance by promise or by performance -- at the offeree’s choice (RSC§32)
  23. RSC § 63 Time When Acceptance Takes Effect (Mailbox Rule)
  24. Acceptance is operative as soon as put out of the offeree’s possession, without regard to whether it reaches the offeror but
  25. Acceptance under an option contract is not operative until received by the offeror
  26. RSC § 61 Acceptance Which Request Change of Terms (Counter-Offer)
  27. An acceptance which request change or addition to the terms of the offer is not invalidated unless the acceptance is made to depend on assent to the changed or added terms (Could be Acceptance + request/ Acceptance + offer)
  • RSC § 54 Acceptance by Performance; Necessity of Notice (Unilateral K)
  • When an offer invited acceptance by performance, no notification is necessary to make acceptance effective unless requested by the offer
  • If one who accepts by performance knows/should know an offeror has no adequate means of learning of performance, the duty of the offeror is discharged unless (a) offeree exercises reasonable diligence to notify the offeror of acceptance (b) offeror learns of performance or (c) the offer indicates notice is not required
  • RSC § 45 Option Contract Created by Part Performance or Tender
  • Where an offer invites acceptance by performance, once you start performance an option contract is created until complete performance
  • RSC § 69 Acceptance by Silence or Exercise of Dominion
  • Silence = Acceptance only when
  • (1) offeree takes benefit (2) with reasonable opportunity to reject (3) and should know compensation is expected
  • Offer allows acceptance and offeree intends to accept w/ silence
  • Where due to previous dealings it is reasonable that offeree should notify the offeror if he does not intend to accept
  • Form Contracts
  • Form contracts in e-commerce require adequate notice and knowing consent for there to be an operative manifestation of assent
  • Accepting a product with full knowledge of the terms constitutes acceptance of the terms
  • Cases
  • Ardente v. Horan [§61] (Counter-offer wanting to keep furniture) -- Power of acceptance terminates upon rejection of the counteroffer
  • Carlill v. Carbolic Smoke Ball Co. [§54] (Advertisement w/ enough info to be an offer) -- Notice of acceptance need not precede performance
  • White v. Coriles & Tift [§54] (Contract for construction work;  brought wood upon estimate) -- Not in enforceable K; no objective manifestation of assent,  sought further agreement
  • Hobbs v. Massasoit Whip Co. [§69] (Eelskins salesman sent product to repeat customer) -- Business practice = acceptance by silence when offeree takes benefit, knows compensation is expected; and could have rejected
  • Specht v. Netscape Communications -- Adequate notice and Knowing consent are required for a manifestation of assent
  • Register.Com, Inc. v. Verio, Inc. -- Accepting a product with full knowledge of terms constitutes acceptance of the terms

  1. Interpreting Vague/Ambiguous Terms
  2. Vague/Ambiguous Definitions
  3. Vague terms include disputes that arise over whether and to what extend words used were meant to apply beyond their agreed core meaning
  4. Ambiguous terms are those which are susceptible to multiple reasonable meanings
  5. RSC § 201 Whose Meaning Prevails
  6. If neither party is aware of the meaning of the other attaches, neither is bound by the meaning of the other, even if this means a failure of mutual assent
  7. RSC § 202 Rules of Aid in Interpretation
  8. Words and other conduct are interpreted as a whole in light of all the circumstances. Unless the parties intentions can be discerned, language is interpreted in accordance with the generally prevailing meaning (Technical terms get prevailing technical meaning)
  9. Wherever reasonable, intend is interpreted as consistent with each other and any relevant Course of Performance, Course of Dealing, or Usage of Trade
  10. Cases
  11. Raffles v. Wichelhaus[§201] (Cotton on ship “peerless”) -- When there is a latent ambiguity, courts cannot impose on a party a contract different than what they agreed to
  12. Oswald v. Allen [§201] (Swiss coins and an old lady) -- When any term used to express an agreement is ambivalent and the parties have understood it in different ways, there can be no contract unless one should be aware of the others meaning
  13. Weinberg v. Edelstein [§202] (Not my women’s dresses) -- Court unable to ignore a universal trend in dress making (usage of trade) although  may be damaged by the interpretation.
  14. Frigaliment v. BNS [§202] (What is the meaning of chicken) -- Alternative trade usages favor the most widely accepted; when departing from the norm must be overwhelmingly clear
  1. Gap Filling
  2. Gap Filling is the process of supplying terms when contracts are silent on a particular issue (Implied in fact/Implied in law)
  3. RSC § 34 Certainty and Choice of Terms; Effect of Performance / Reliance
  4. Terms may be reasonably certain even if it empowers one or both parties to make a selection in the course of performance
  5. Past performance may remove uncertainty and establish an enforceable bargain has been formed
  6. Action in reliance on an agreement may make remedies appropriate even though uncertainty is not removed
  7. RSC § 204 Supplying an Omitted Essential Term
  8. When the parties to a bargain sufficiently defined to be a contract a term reasonable under the circumstances is supplied by the court
  9. If the parties objectively intended to be bound -- the court should supply a term; if the parties lacked understanding of the allocation of risk or the gap could be filled by too many reasonable ways-- no contract
  10. Cases
  11. Sun Printing v. Remington Paper [§204] (Paper contract which contained floating price term) -- When important terms are left unfilled, moving party has burden of showing not material; court cant make K from agreement to agree
  12. Wood v. Lady Duff [§204] (My name is my name) -- obligation may be imperfectly expressed yet instinctive, where such is the case a term will be supplied
  13. Form Contracts
  14. RSC § 211 Standardized Agreements
  15. When a party knowingly manifest his assent to a form contract, he is bound unless the other party has reason to know that knowledge of a term would preclude assent; that particular term is void
  16. Taking the product is a manifestation of assent to the terms -- if given sufficient notice and opportunity to reject then one is bound , subject to unconscionability (ProCD)
  17. Cases
  18. Carnival Cruise Lines v. Shute[§211] -- Notice and opportunity mean you are bound regardless if you read terms
  19. Caspi v. Microsoft Networks [§211] -- in absence of fraud one is bound by form contract; automatic inquiry notice
  20. Step-Saver v. Wyse [UCC]
  21. ProCD v. Zeidenberg [UCC]
  22. Hill v. Gateway 2000 [UCC]
  23. Klocek v. Gateway [UCC]
  24. Parol Evidence
  25. RSC § 209 Integrated Agreements
  26. An integrated agreement is a complete and final expression of an intent to be bound. Writing determined (matter/law) in view of completeness and specificity triggers parole evidence unless evidence establishes writing not a complete expression
  27. RSC § 210 Completely and Partially Integrated Agreements
  28. A completely integrated agreement is a complete/exclusive statement of the terms; whether completely or partially integrated is a matter of law
  29. RSC § 213 Effect of Integrated Agreement on Prior Agreement (Parol Evidence Rule)
  30. A binding integrated agreement discharges prior agreements to the extend it is inconsistent with them
  31. A binding complexly integrated agreement discharges prior agreements to the extend they are within its scope
  32. Incomplete expressions may be rendered inoperative or incomplete by parol evidence
  33. RSC § 214 Evidence of Prior or Contemporaneous Agreements/Negotiations
  34. Extrinsic evidence is admissible to establish 1) the writing is or is not an integrated agreement 2) complete or partial integration 3) the meaning of the writing 4) grounds for invalidation 5) grounds for granting/denying remedies
  35. RSC § 216 Consistent Additional Terms
  36. Evidence of a consistent additional term is admissible to supplement a partially integrated agreement
  37. A writing is partially integrated if it omits a consistent additional term which has 1) separate consideration or is 2) naturally/reasonably omitted
  38. Cases
  39. Thompson v. Libbey [§213](logging contract) -- completeness is judged as a full expression within the four corners; if all material terms are present the writing is assumed to be complete.
  40. Brown v. Oliver [§210](Hotel Furniture) -- General principle/if element contained in writing then expression complete; if missing to material fact then evidence admissible
  41. Pacific Gas v. GW Thomas [§210](indemnity clause/stream turbine) -- rational interpretation requires atleast a preliminary consideration of credible evidence (Matter/law)
  42. Trident Center v. Conn General Life Ins [§210](LA Office building) -- establishes broad reading of Pacific Gas requiring consideration of all extrinsic evidence -- wrong
  43. Statute of Frauds
  44. RSC § 110 Classes of Contracts Covered
  45. Contractual duty of an executor for duty of his decedent
  46. Contractual duty to answer for the duty of another (Surety)
  47. Contract made upon consideration of marriage
  48. Contract for the sale of land
  49. Incapable of preforming within one year
  50. Goods over $500; securities; property worth over $5000
  51. Writing must contain all material terms and be signed by the person whom enforcement is sought (RST§131)
  52. RSC § 125 Contract to Transfer, Buy, or Pay for Interest in Land
  53. Any contract for land is within SOF regardless of whom the transfer is to be made. Once transfer has been made the promise can be enforced regardless of SOF
  54. RSC § 129 Action in Reliance; Specific Performance
  55. Specific Performance may be enforced on contracts for sale of land notwithstanding SOF if there has been reasonable detrimental reliance and justice requires enforcement
  56. RSC 130 Contract Not to be Performed Within a Year
  57. When one party completes performance, the one year provision does not prevent enforcement of the promise
  58. Cases
  59. Riley v. Capital Airlines, Inc. [§129] (K for methane canceled by  after additional tanks brought) -- Although K is canceled going forward, entitled to reasonable good faith reliance damages
  60. Ohanian v. Rent-a-Car [§§129, 110] (Rental salesman for life) -- Contract was capable of performance within one year therefore SOF does not apply; K enforced

  1. Bargain Theory
  2. RSC § 71 Requirement of Exchange; Types of Exchange
  3. Consideration requires mutual intent + Inducement and can be given through third parties. (Intent evidence by objective gain or loss undertook)
  4. RSC § 24 Offer Defined -- Comment B (Gratuitous gifts)
  5. Promise performable on a certain contingency is not enforceable -- there must be an element of exchange
  6. RSC § 81 Consideration as Motive/ Inducing Cause (Ulterior Motive)
  7. Ulterior motives for inducement do not prevent it from being consideration
  8. RSC § 79 Adequacy of Consideration; Mutuality of Obligation
  9. There are no requirements of equivalence in the values exchanged or mutuality of obligations
  10. RSC § 364 Effects of Unfairness
  11. Specific Performance or injunction will be refused if such relief would be unfair because the exchange is grossly inadequate or the terms of the contract are otherwise unfair
  12. Cases
  13. Johnson v. Otterbien Univ. [§24](Promise to make gift) -- Promises that create no duties before performance are generally gratuitous promises
  14. Hamer v. Sidway [§71]( Uncle pay nephew to stop smoking/ drinking) -- Consideration may be supported by undertaking some detriment
  15. Kirksey v. Kirksey [§24] (Widowed sister-in law/ territory claiming scheme) -- No duty to transfer land because promise not supported by consideration -- mere gratuitous promise
  16. Dahl v. Hem Pham. [§71](New drug trials for 1 year supply) -- Consideration in unilateral K is performance; duties are created upon performance.
  17. US v. Stump Home Specialties[§79](Posner) -- Law does not require that consideration be adequate or equal in weight to what the accepting party is giving up
  18. Past Consideration/Moral Consideration
  19. RSC § 86 Promise for Benefit Received
  20. A promise made in recognition of a benefit previously received is binding to the extent necessary to prevent injustice
  21. A promise is not binding under (a) if the benefit was a gift, promisor wasn’t made unjustly enriched, or to the extent the promises’ value is disproportionate to the benefit
  • Cases
  • Moore v. Elmer [§86] (I bet you die… ) -- Past performance cannot be consideration for a new promise unless the parties agreed that compensation for performance would be rendered at a later date (preexisting duty)
  • Mills v. Wyman [§86] (Father refuses to pay (adult) sick son’s medical bills) -- No moral duties except voluntary revival of an inoperative obligation
  1. Modification and the Preexisting Duty Rule
  2. RSC § 89 Modification of Executory Contract
  3. A promise modifying a contractual duty under a contract not fully performed is binding if such is fair and equitable in view of circumstances not anticipated ex ante; to the extent provided by statute or to the extent justice requires
  4. Cases
  5. Stilk v. Myrick [§89] (Sailor pay increase when two people deserted) -- There was a preexisting duty to complete voyage -- enforceable modification required additional consideration; one cannot use emergency to force modification
  6. Alaska Packers’ Assn. v. Domenico[§89](Alaska fishing trip) -- Where a promise is simply a repetition of a subsisting legal duty, it cannot be consideration for a new promise
  7. Promissory Estoppel
  8. RSC § 90 Promise Reasonably Inducing Action or Forbearance
  9. A promise which the promisor should reasonably expect to induce good faith action/forbearance by the promisee and which produces such action is binding to the extent justice requires
  10. A charitable subscription or marriage settlement is binding under (1) without proof the promise induced any action
  11. Cases
  12. Ricketts v. Scothorn [§90](Granddad pays GD to stop working) -- When one relies on a promise to their detriment and such promise was given with the intent to induce such detriment -- lack of consideration does not void agreement
  13. Allegheny College v. Bank of Jamestown [§90]-- Charitable subscriptions (promises to pay upon death through estate) are enforceable even if unbargained for
  14. Goodman v. Dicker [§90] (radio franchise denied after reliance)--Justice requires one who acts to his detriment upon good faith reliance which the promisor is aware is protected.
  15. Hoffman v. Red Owl Stores Inc. [§90](Grocery store chain)--Promissory estoppel does not require all terms be comprehensive; reliance measures can be given without such
  16. Implied Duties / Warranties
  17. RSC § 205 Duty of Good Faith Performance
  18. Every Contract imposes upon each party a duty of good faith and fair dealing in its performance and enforcement.
  19. Cases
  20. Goldberg Corp. v. Levy [§205] (Gross-profit clause that allowed termination) -- When business diversion is taken solely to drop sales and cancel K, GFP is breached
  21. Mutual Life NY v. Tailored Woman [§205](Fur Business/5th floor) --The exercise of contractual rights (although in manners unanticipated) does not constitute breach of GFP
  22. Stop&Shop v. Ganem [§205] (Grocery Store w/ % payment) -- Omission of a term is evidence no such term exist; fair-market rent suggest risk allocation didn’t require operations and the duty cant be implied w/o clear implication
  23. Great American Cookie Co [§205](Posner) -- Breach of GFP is a negative duty -- broken when a contractual provision is invoked dishonestly for a purpose contrary to those which the contract is made.
  24. Step-Saver v. Wyse [UCC]